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Shell canvasses industrial gas buyers in new east coast push

Shell canvasses industrial gas buyers in new east coast push

Shell has ramped up its efforts to capture a bigger share of the east coast industrial gas market, inviting buyers to bid for supplies out to 2025
just as LNG import projects proposed by rivals in NSW and Victoria also hunt for customers.

The move underlines the energy giant's near-term ambitions to leverage off its growing trading presence in gas and power on the east coast, targeting
commercial and industrial (C&I) customers which have become a lower priority for some gas retailers that are focusing on higher margin sales
to households.

Gas buyers on the east coast have been struggling to lock in affordable long-term supplies as production costs rise and more gas is exported from Queensland.
Shell's move to broadly canvass interest in new local demand follows last year's blind tender process used by the Esso/BHP Gippsland Basin joint venture for gas available over 2018 and 2019 which was targeted at large customers willing to agree to strict fixed terms.

"Our team in Shell Energy Australia is reaching out to all wholesale and C&I customers across the east coast, to understand what demand exists
and how we can meet it beyond just this year out to the middle of next decade," said Shell's chair in Australia Zoe Yujnovich.

"We welcome responses from all wholesale and C&I buyers and will work hard to meet that demand."

The request from Shell's east coast trading arm for expressions of interest (EOI) on gas supply is for deliveries between January 1 next year until
January 1, 2025. Shell, which owns the QGC domestic gas and LNG export business in Queensland, is expected to assess the bids before drawing up
a shortlist of potential customers by mid-May to negotiate with on contracts.

Customers can elect for year-round deliveries, or only through the peak winter months of June-August, or for another period. Supplies are on a 90 per
cent take-or-pay basis.

"Our EOI targets both existing and potential clients as it makes sense to build up capacity in the industrial customer base first," Ms Yujnovich said.

"Additionally, given this is a strategy we are learning a lot about through our organisation globally we want to learn and adapt as we return to the
power market."

NSW-based Weston Energy, which sources gas for medium-sized users, has responded to the tender but chief executive Garbis Simonian is unconvinced gas
will be cheap enough.

"We've said we're ready to deal and buy, but we're not convinced," Mr Simonian said. "It all depends on prices. Their gas is in Queensland and it's
$2.50 or $3.50 [a gigajoule] to get it down south, so what's it going to cost?"

Spot gas prices have risen post the Easter lull, and were about $8 a gigajoule in NSW on Wednesday.

Ms Yujnovich underlined the significant changes in the energy market in recent decades, as well as developments in Shell's own portfolio that underpin
a new push into east coast supply. She said shifts in Shell's asset mix in Australia means the group is "largely now an integrated gas player which
we believe positions us well to support the energy transition" both in export markets and in domestic gas.